BTr rejects bids for 4-yr T-bonds

The Bureau of the Treasury (BTr) again rejected bids for the government’s four-year Treasury bonds (T-bonds) yesterday as banks submitted unreasonably high offers.

Had the government accepted the bids, the average rate of the four-year paper would have gone up to 7.711 percent, up from 5.876 percent previously.

During yesterday’s auction, tenders reached P2.980 billion.

Finance Undersecretary and Acting National Treasurer Roberto Tan attributed the rise in rates to the higher-than-expected inflation rate.

Inflation or the rise in consumer prices has been going up due to skyrocketing oil and food prices. Inflation rose 6.4 percent in March from 5.4 percent in February.

Tan said investors are also staying on the sidelines and are probably waiting for the central bank’s move on Thursday. Monetary authorities will have arate-setting meeting on Thursday for the central bank’s key policy rates.

”Investors are probably waiting for a clearer picture of inflation expectations,” Tan told reporters.

During its meeting last March 13, the central bank kept policy interest rates at five percent for the overnight borrowing or reverse repurchase (RRP) facility and seven percent for the overnight lending or repurchase (RP) facility.

Monetary authorities also decided to close the central bank’s existing windows for short-term Special DepositAccount (SDA) facility, particularly the two, three,and six-month tenors.

Banks have been submitting high offers given the buildup in inflation but the government’s auction committee said it can afford to reject bids for now given that the maturities are manageable.